The Rundown - OpenAI Takes On Google With SearchGPT, Uber & Lyft Win California Ruling

Episode Date: July 26, 2024

Stock market update for July 26, 2024.

Public.com presents the rundown, your daily market update in five minutes. My name is Zaid Admani, and today is Friday, July 26th. In today's episode, we recap the latest GDP and inflation numbers and tell you what it means for future rate cuts. Also, Open AI is launching their own AI search engine, making Google investors kind of nervous. Then stick around to the end of the show to find out how much money the new Deadpool movie is expected to make this weekend. It might break records.

All right, let's go. Well, if you were hoping for stocks to bounce back on Thursday after the carnage on Wednesday, sorry to tell you that didn't happen. The S&P and NASDAQ both finished lower on Thursday with the S&P dropping 0.5%, and the NASDAQ was down almost 1% thanks to tech stocks continuing to sell off. We're continuing to see the rotation out of big tech stocks into other sectors. In fact, six out of them seven, magnificent seven stocks were in the red yesterday with Tesla, the only one to being the green.

And the Russell 2000, which is made up of small cap stocks, was up more than 1% yesterday. So either this is a great buying opportunity into big tech or the slide is going to continue. I think next week might be a make-or-break week because we're going to get earnings from Apple, Amazon, Meta, and Microsoft. Not going to lie, I'm a little nervous. Now, we did get some good economic data yesterday. The second quarter GDP numbers were released. And the U.S. GDP grew by 2.8%, growing much faster than the 2.1% that economists had

estimated and also much higher than the 1.4% that we saw in the first quarter. So the economy's doing pretty well. And we just got some inflation data this morning. The Fed's preferred inflation gauge the PCE was up 2.5% in June, which is in line with expectations. This is all setting up for the Fed to cut interest rates at the September meeting, or maybe even sooner. There's a Fed meeting happening next week, and there's been some buzz. The Fed might actually cut rates at that meeting as well and not even wait until September. So I guess we'll see. We're going to find out their decision on July 31st, followed by a Jerome Powell press conference. So we're going to be paying attention to that. We're going to be recapping it on the rundown next week. So make sure you guys are

subscribed to the pod. Next week is going to be stacked. Let's run through some headlines. Watch out Google because Open AI is coming. The maker of Chad GPT announced yesterday that they're launching an AI powered search engine that can access the internet in real time and they're calling it SearchGPT. Search GPT will curate and summarize information from credible news sources. Open AI is working with multiple publishers on this product. Now, Google's stock took a dive

the minute this announcement came out. And it's not hard to see why because search advertising makes up 75% of Google's total revenue, so any disruption to that business could have a massive impact on Google's revenues and profits. And it's not just Open AI coming for Google. There's a startup called Perplexity that made a name for itself as the AI search engine.

But personally, I don't think that Google's business is in trouble, at least not anytime soon. Because at this point, Google has become a verb. People have been using it for two plus decades. And I don't think that people are going to switch their search habits overnight, no matter how frustrating or ad-filled Google's search has become these days. Also, we don't even know how good search GPT even is. Right now, it's only available for a small group of users. And this might be a hot take, but I feel like Open AI is more hype these days than anything.

Like, remember a few months ago where they demoed their AI voice assistant? feature that kind of sounded like Scarlett Johansson. The demo looked really cool. Everyone was hyped about it. Still hasn't come out yet. Chat GPT is not even the best AI tool these days. Okay, there's a lot of other great ones. I sound like a straight up hater right now. But I'm just trying to make a point here that Google will probably be okay. And Google continues to make progress in AI. They have that AI summary feature on search. It's pretty decent. And they're investing heavily in AI infrastructure. On their earnings call this week, they told investors they plan to spend at least $12 billion a quarter on capital expenditure,

which will total $49 billion for the full year. So they're spending a lot on AI. That's actually affecting their stock because investors want to see an ROI on that investment, which hasn't really materialized yet. It's one of the reasons why Google's stock is down more than 7% for the week. Let's shift gears and talk about Uber and Lyft.

The right-sharing companies won their case in California court to keep treating drivers as contractors instead of full-time employees. Now, the dispute here was that the state of California wanted drivers to have full-time employee status and the benefits that came with that, such as health care. Now, the ride-sharing companies argued that employee status would force drivers to work longer hours, and the gig jobs would no longer be as flexible as drivers desired.

And also, like, paying the increased benefits and wages would cost Uber and Lyft a ton of money and probably change their business strategy. Uber and Lyft are starting to become pretty expensive these days. I think taxis might even be cheaper in some cities at this point, and those costs might have gone up if drivers were given full-time employee status. According to Investment Bank Jeffries, Uber's costs were expected to rise by $1.1 billion.

But because of this judgment, Uber and Lyft drivers will continue to be treated as contractors. This is also good news for DoorDash and other food delivery apps whose costs were also expected to rise by $1 billion. Let's talk about some stocks making moves today. Duolingo stock is up in the pre-market this morning because Bank of America gave the stock a buy rating with a price target of $245 per share. Bank of America says Duolingo is the highest growth stock that it covers in the internet sector. Dualingo currently trades around $168 per share. Dualingo stock is up 3% in the pre-market on this upgrade. On the flip side, shares of Dexcom are tanking this morning after they reported disappointing

earnings and weak guidance. Dexcom is a medical device maker. They make devices to monitor blood glucose levels for people diagnosed with diabetes. And their second quarter numbers weren't even that bad. The revenues were up 15% and profits were up 23%. both beating Wall Street estimates, but the company warned of their business slowing down moving forward. They lowered their full year forecast. Dexcom stock is down nearly 40% in the pre-market in reaction to these earnings. That is a crazy reaction. All right, let's wrap the show with a fun

fact. The new Deadpool movie is hitting theaters today. It's called Deadpool and Wolverine, and it's expected to take in between $160 and $170 million at the domestic box office over the weekend. That would make it the largest R-rated opening in history surpassing the $132 million that Deadpool 1 brought back in 2016. The highest grossing R-rated film ever in history is Joker, which hit theaters back in 2019, and made over a billion dollars. So that's pretty impressive. Now, what's interesting is that Disney actually acquired the rights to both Deadpool and X-Men when it bought 21st Century Fox for $71 billion back in 2019. So this is the first time that a Deadpool movie is coming out as a Disney movie, which I don't know why I find that kind of funny. But yeah, it's expected to do huge numbers, and some are saying that it might overtake Joker as the highest grossing R-rated movie in history.

Well, all right, guys, that's the rundown for today. That's the rundown for the week. Another action-pack week. I do want to leave you guys with a quick Friday recommendation. Go check out my friend Kyla Scanlan on Instagram. Her content is fantastic. She makes great videos explaining economic stories that are really easy to understand and entertaining. I've been a fan since 2021.

She's one of my favorite creators, and she's also the host of Public. leading indicator podcast, which is a great podcast. So go check that out too. We'll leave a link in the description for Kyla's Instagram and also leading indicator. Hope you guys enjoy the podcast this week. I mean, I'm going to need the weekend to recover from all this because there was a lot going on. And next week is going to be even crazier. Make sure you guys are subscribed to the pod.

Don't forget to hit us with that five-star rating on Spotify and Apple. Thank you guys so much for listening. Shout out to Connor and Mike for all the help behind the scenes. We'll see you guys back here on Monday. This is the rundown. Your real-time resource for new events and friends in the markets. All views presented in the show reflect the opinion of the guests. not take any mention of publicly traded security as recommendation to buy, sell or hold that security.

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